Expanded Control Sanctions on Exports to Russia

Hello again. This George Thompson and, you know, I’ve been trying to keep you current on the export control sanctions imposed on Russia. If it seems like new ones are issued all the time, well, they are. The most recent ones were published by the Bureau of Industry and Security earlier this month.

The expanded controls include a number of chemicals classified as EAR99, that is, they are not on the Commerce Control List. These were identified as potentially useful for chemical and biological weapon development. The controlled items are specified by Chemical Abstract Number, not by Harmonized Tariff Schedule classification as was the case with previous controls on EAR99 items. Other newly-designated EAR99 articles include equipment useful for advanced manufacturing.

Also note that the industry sector controls on Russia have been extended to Belarus, so now both countries are covered by them.

Additionally, the military end use/end user controls have been expanded in a couple of ways. BIS can inform an exporter that a license is required to sell to parties considered as diversion risks.

These parties are generally not military end users themselves, but instead are surreptitious suppliers to those parties covered by the MEU license requirement. Not only will specific sales to those foreign buyers require a BIS license, but the buyers themselves may be placed on the Entity List thereby cutting them off from U.S. export trade altogether.

In fact, back in June, BIS added 36 Russian and non-Russian companies to the Entity List for doing this very thing. So, exporters and reexporters of items subject to the EAR have to beware that the Russian export control sanctions may have consequences outside of Russia.

Following up on that point, the BIS rule now expands the military end user controls to Belarusian, Burmese, Cambodian, Chinese, Russian, and Venezuelan military end users located anywhere in the world, not just in those countries themselves. The military-intelligence end user controls for those countries are similarly expanded.

BIS plans to list the restricted third-country parties which, of course, will be an essential step to ensure compliance so that exporters and reexporters know who they are.

The BIS rule clarifies the applicability of certain license exceptions to Russia, and makes a number of conforming changes to the EAR, so my discussion today is by no means exhaustive. 

What I suggest you keep in mind is that an even bigger share of previously legitimate trade with Russia is now controlled. Coupled with the aggressive new BIS enforcement policy, exporters and reexporters have to ensure the expanded controls are addressed in their compliance programs to avoid potential violations.